Posted By Davis & Hoss, pc || 18-Mar-2011

This case involves, in part, what is commonly referred to as a promotion money laundering case. Darrell Crosgrove appealed his conviction and sentence for conspiracy to commit mail fraud, in violation of 18 U.S.C. § 371, and conspiracy to commit money laundering, in violation of 18 U.S.C. § 1956(h). The mail fraud conviction was affirmed by the Sixth Circuit. But, the Court also found that the government did not produce sufficient evidence at trial to support the conspiracy to commit money laundering charge, and the judgment of conviction for that count was vacated.

Of significance to the Sixth Circuit on the money laundering charge was that the government failed to show that the money involved in the alleged transactions represented the profits of unlawful activity, as required under United States v. Santos, 553 U.S. 507, 514 (2008), and United States v. Kratt, 579 F.3d 558, 561-62 (6th Cir.2009).

The indictment stated that Crosgrove conspired to participate in promotion money laundering. "Promotion” money laundering involves actual reinvestment of proceeds of unlawful activity into the illegal scheme from which the proceeds were derived. In other words, the money has to be put back to work in the crime. For this theory of prosecution to work, the government must put on proof and the Government must identify transactions--actual or planned-- that uses money from the underlying crime.

This case follows the Supreme Court's opinion in Santos. In Santos’ case, "proceeds” must mean profits and not merely receipts. Here, monthly payments Crosgrove received were viewed by the Court as nothing more than payments for services rendered. "Because the Government did not show that these payments were made from profits, the conspiracy to commit money laundering charge cannot be upheld." The case is remanded for resentencing, and that will be a significant change now without the money laundering charges.